U.S. regulators are likely to reject Ethereum (ETH) spot ETFs, and cryptocurrencies will likely face fewer legal battles over spot ETFs, according to Bloomberg ETF analyst Eric Balchunas.
The analyst’s latest view is a sign of disappointment for Ethereum bulls and is in stark contrast to his previous optimism about the Bitcoin Spot ETF prior to its approval in January.
Is Ethereum ETF worth fighting for?
on wednesday TweetBalciunas mentioned a popular theory that the crypto industry will sue the Securities and Exchange Commission (SEC) if it refuses to approve the ETH Spot ETF by May, the final deadline for issuing verdicts on multiple applicants. did.
“I question this since the Ether futures-only ETF has 4% of the assets held in Bitcoin futures,” Balciunas wrote. “That's a lot of time and money for something that might only get you a fraction of a parrot.”
ProShares Bitcoin Strategy ETF (BITO), the country's first Bitcoin futures ETF, raised $1 billion in the first two days of its 2021 launch. The company currently holds $2.7 billion worth of Bitcoin futures contracts, with its biggest leveraged rival holding another $1.6 billion.
By comparison, the ProShares Ether Strategy ETF, launched nearly two years later, has garnered little interest from the same investors and currently has just $72 million in assets under management. This is a potential sign that institutional investors do not have the same appetite for the second-largest digital asset.
Previous comments from sponsors of some of the largest Bitcoin ETFs would support this claim. Bitwise CIO Matt Hogan I have written Last month, the Ether ETF could gain further momentum if it launches much later than the Bitcoin ETF, and BTCin its own class” Regarding the interests of the institution.
Additionally, BlackRock's head of digital assets, Robert Mitchnick, said in March that Bitcoin is “by far the top priority” for crypto exposure among the firm's client base. “Then a little bit of Ethereum, and pretty much everything else,” he added.
What is Grayscale looking for?
Conversely, Ethereum bulls argue that it is inappropriate to compare the performance of futures ETFs, especially given that the launch timing of futures ETFs varies widely.
“A better comparison here is GBTC and ETHE, with GBTC having assets under management of $30 billion before the conversion (January 10) and ETHE having $7.3 billion.” tweeted sassal.eth in early March.
The SEC had previously opposed Bitcoin Spot ETFs, arguing that they were more vulnerable to market manipulation than futures-based funds.
A year-long lawsuit brought by Grayscale forced the company to retract its position, and the ETF was subsequently approved. But ironically, the increased competition brought about by the approval caused Grayscale Bitcoin Trust (GBTC) to lose nearly half of its Bitcoin within three months.
“Does Grayscale really want to incur the legal costs of increasing BlackRock's blockbuster and leaks again to what is clearly a much smaller production?” Balciunas added.
